Coming Soon: The $30 Pay-Per-View Movie

[Woochifer]

Chalk this one up as one of the more tone deaf ideas to come out of Hollywood in quite a while. Yes, the studios want to let movies premiere on pay-per-view (PPV) only two months after they are released in theaters, but they also want to charge $30 for this early viewing.

http://www.reuters.com/article/2011/04/01/industry-us-vod-idUSTRE7300L920110401

For all the chatter about disc media and digital distribution, the bottom line is that movie revenue has always been driven by the release window -- demand for a new movie is greatest right when it comes out in theaters, and demand for home video is also greatest at the time of release. The studios know this, and they've had a successful formula for staggering the different release schedules based on how demand varies over time.

Well, now the studios have concluded that moviegoers are willing to pay over $10 a ticket to see a movie in theaters, and/or about $20 to purchase a DVD/Blu-ray 120 days later (the typical time between a movie's initial theatrical run and its debut on home video). Therefore, there must be a huge demand to see a movie on PPV for $30 if they move the PPV debut up to 60 days!

Movie theater owners are positively pissed about this plan. Up to this point, theaters have had an uneasy agreement with the studios to have a theatrical release window of at least 120 days for new movies. The studios have periodically pushed out some DVD/Blu-ray titles after about 90 days, but this has not taken hold as a general trend. Movies that can sustain long theatrical runs make more money for theaters. Moving the PPV debut up to 60 days encroaches on their revenues.

But, I don't think theater owners really have much to worry about. Honestly, who the hell is going to shell out $30 for a PPV rental? This costs more than a pair of movie tickets, and it's more than most DVD/Blu-ray titles. At least with the movie theater, it's an outing, a date night, etc. And with DVDs and Blu-rays, you get to keep the movie for repeat viewing.

I understand the premise of people wanting to see something first, but I think $30 goes well beyond what most consumers are willing to pay for the privilege. And it's not like you see it first, since the movie will have already been in theaters for two months.

Those consumers that currently use PPV are used to paying ~$5 for a download or cable/satellite rental. The release date for many PPV movies now match the DVD/Blu-ray release date. I understand the idea of paying $5 for a PPV rental that's available 30 days before Netflix or Redbox. But, are consumers really going to pay an extra $25 so they can watch it at home two months before everybody else?

This whole idea stinks of bean counters run amok (the idiocy ranks up there with the DIVX PPV disc format) ...

[kexodusc]

Wow, I like movies, but that kind of pricing would drive me to seek other forms of entertainment. Trying to think who would pay $30 to see a dud like Date Night?

[bobsticks]

That wasn't an April Fool's thing?

[luvtolisten]

Think I'll pass on that. Being first isn't always best.

[Feanor]

Well, people are apparently willing to pay $50 for pay-per-view WWE event -- not me I can assure you. Something about that is that the $50 is typically spread over several viewers. I suppose the film cos. are believing the same will be true for early release film viewers.

But I have felt for quite a while that media orignators have a distorted view of what people should, and are actually willing, to pay for their crap. E.g. we've had long debates with Sir Terrence on the subject of whether $0.99/song download justfied can be justfied vs. a $10 phyisical CD. An industry insider, Sir T. lives in a la-la land where this makes sense but most of us have a more rational perspective.

What? the flick as been the theatre for 2 months? Let me tell you it has also probably been available via bit torrent for several weeks. The same is true for the music too, obviously. We're seen growing rich-poor disparity in North American, but the entertainment industry is pricing its products for rich only. At least up 'till the poor can get their commodity for free, (unlike some other commodities such as food or a place to live).

[kexodusc]

We're seen growing rich-poor disparity in North American, but the entertainment industry is pricing its products for rich only. At least up 'till the poor can get their commodity for free, (unlike some other commodities such as food or a place to live).
Second time I've heard that this week...OT, but got any sources to back that up? (genuinely curious to know). How are we measuring this? Just disposable income, or quality of life? I would have thought that today's poor are for the most part far better off than the poor of any previous generation...If that's not the case it's a bit concerning.

[Feanor]

Second time I've heard that this week...OT, but got any sources to back that up? (genuinely curious to know). How are we measuring this? Just disposable income, or quality of life? I would have thought that today's poor are for the most part far better off than the poor of any previous generation...If that's not the case it's a bit concerning.
Maybe it's personal bias: as an older worker bump from company to successor company in corporate takeovers, I didn't get a raise between 2000 and 2010 when I retired. Special case? Not really.

The statistics demonstrate that the real disposable income of a majority have fallen, especially in the last decade. One reference I'm currenly reading, is Richard B. Reich's Aftershock: The Next Economy and America's Future, (here (http://www.amazon.com/Aftershock-Economy-Americas-Future-Vintage/dp/0307476332/ref=sr_1_1?s=books&ie=UTF8&qid=1301835456&sr=1-1)). But this is something I've been aware of for quite some time. We ought to understand this: the standard of living (such as it is) of the workers and the lower middle class has be sustain by (i) mortgates and relatively cheap credit, and (ii) cheap goods from China -- neither of these will last much longer.

Has the quality of live of the same people improved in the last couple of decades? Surely you jest: job security and satisfaction have dropped like a stone in that interval. You might care to read Richard Sennett's The Culture of the New Capitalism, (here (http://www.amazon.com/Culture-Capitalism-Prof-Richard-Sennett/dp/0300119925/ref=sr_1_1?s=books&ie=UTF8&qid=1301836144&sr=1-1)).

[kexodusc]

Has the quality of live of the same people improved in the last couple of decades? Surely you jest: job security and satisfaction have dropped like a stone in that interval. You might care to read Richard Sennett's The Culture of the New Capitalism, (here (http://www.amazon.com/Culture-Capitalism-Prof-Richard-Sennett/dp/0300119925/ref=sr_1_1?s=books&ie=UTF8&qid=1301836144&sr=1-1)).

I dunno. Life expectancy is higher, even much of the poor have TV, internet, smartphones. Most welfare programs now consider internet service in the basket of necessities in needs calculations. Huge advantage over previous generations just in the access to information/education the internet provides.

Fluoride in water has reduced oral diseases (once the source of most diseases), social welfare is better than it was a generation ago...Not saying everyone is doing better, some people are in unbelievably bad situations...I don't think yesterday's rich have shown as much improvement in their quality of life as the poor of previous generations. The luxuries of life, no question...

Are we still poorer than the rich? Yeah. Is the pooling of wealth aggregating among fewer people? Yes. Are the poor worse off than the poor of yesterday? Not so sure. Not saying they're not, just find it hard to believe intuitively. If they are, advocate groups are doing a piss poor job of making it a more important social issue.

[Feanor]

I dunno. Life expectancy is higher, even much of the poor have TV, internet, smartphones. Most welfare programs now consider internet service in the basket of necessities in needs calculations. Huge advantage over previous generations just in the access to information/education the internet provides.

Fluoride in water has reduced oral diseases (once the source of most diseases), social welfare is better than it was a generation ago...Not saying everyone is doing better, some people are in unbelievably bad situations...I don't think yesterday's rich have shown as much improvement in their quality of life as the poor of previous generations. The luxuries of life, no question...

Are we still poorer than the rich? Yeah. Is the pooling of wealth aggregating among fewer people? Yes. Are the poor worse off than the poor of yesterday? Not so sure. Not saying they're not, just find it hard to believe intuitively. If they are, advocate groups are doing a piss poor job of making it a more important social issue.
Read the book!

But like I said earlier, the standard of living of the working poor has yet to decline. However when you consider that it has been sustained by:

Borrowing via credit cards, second mortgages, etc., (as I mentioned above)
Cheap goods for China et al., (as mentioned), and also
Two working spouses
Longer working hours
Second jobs,it's obvious the things don't bode well for sustaing it much longer.

Have advocacy groups done a good job? No. Have political parties on the life done a good? No, propably because they get more and more of their funds from the establishment. Have the right-wing parties done a good job? Hell, yes; a damn good job of selling free enterprises & small government mythologies by appealing to peoples fears & prejudics

[Woochifer]

Well, people are apparently willing to pay $50 for pay-per-view WWE event -- not me I can assure you. Something about that is that the $50 is typically spread over several viewers. I suppose the film cos. are believing the same will be true for early release film viewers.

Key difference though is that $50 for WWE or boxing event is that you're paying to see a live sporting event that cannot be seen in any other venue. That's another illustration of the value assigned to the release window, because in that case nearly all of the value occurs in real time.

I don't see the value in a $30 PPV movie precisely because it has already played in theaters for two months. If this was a simultaneous release on the same day a movie arrives in theaters, then you might have an audience there.


But I have felt for quite a while that media orignators have a distorted view of what people should, and are actually willing, to pay for their crap. E.g. we've had long debates with Sir Terrence on the subject of whether $0.99/song download justfied can be justfied vs. a $10 phyisical CD. An industry insider, Sir T. lives in a la-la land where this makes sense but most of us have a more rational perspective.

I don't think that perspective equates to "la-la land" because the market is deciding what people are willing to pay for and what they're not. The media giants will maximize the revenues within the bounds of what consumers are willing to pay for. If they overreach, then you will see a backlash. I think the dissolution of the recording industry has many many factors contributing to it, which I've gone over in another thread.

But, if you look at the revenues from the movie studios, they've actually been doing quite well. Of course, that doesn't stop them from trying other avenues to generate more revenue. If it's an asinine idea, it will wither and die in the market, much like other bouts of idiocy like the DIVX disc.


What? the flick as been the theatre for 2 months? Let me tell you it has also probably been available via bit torrent for several weeks.

But does every BitTorrent download equal a lost sale? If you agree with that, then you're buying into the RIAA and MPAA's arguments that any revenue declines are primarily due to piracy. It's this premise that they've used as justification for their lawsuits on P-2-P downloaders

I've long argued that BitTorrent downloaders are not consumers that will pay a lot for media in general. That's not lost revenue, that's revenue that never would have been generated in the first place.


The same is true for the music too, obviously. We're seen growing rich-poor disparity in North American, but the entertainment industry is pricing its products for rich only. At least up 'till the poor can get their commodity for free, (unlike some other commodities such as food or a place to live).

I don't think that's true (though your assertion about the rich-poor disparity is spot on). Entertainment options have always competed for discretionary income. If you want something right away when it's brand new, then you have to expect to pay more. That's how it's always been.

In the old days before home video, you had first run theaters and second run repertory theaters. Ticket prices were more expensive for first run.

Now, with home video you have the same kind of two-tiered pricing. If you're willing to wait, you will find a DVD that now costs over $20 sitting in the $5 bins. If that's too much, then wait for the $1 rentals to come to Redbox. If that's still too much, then opt for the all-you-can-eat streaming on Netflix for less than $10/month. And if that's still too much, then wait for it to show on broadcast TV. That's following the same natural progression of demand, and the rights for different venues are priced accordingly.

Same deal with music. If that $15 new release CD costs too much, then wait until used copies start showing up at music stores, or the pricing goes below $10 for new copies. Or if that's too much, then opt for the $1 song downloads on iTunes. If that's still too much, then try other venues like Pandora or other legal music streaming sites. There are many avenues.

[Woochifer]

Second time I've heard that this week...OT, but got any sources to back that up? (genuinely curious to know). How are we measuring this? Just disposable income, or quality of life? I would have thought that today's poor are for the most part far better off than the poor of any previous generation...If that's not the case it's a bit concerning.

This is a tricky question, but I think when it comes to disposable income, I go along with David Pogue's (tech writer for the NY Times) general view. He asserts that new technology does not always replace previous ones, but many times adds additional options to the mix. The number of consumer technologies and entertainment options that the market can support is not a constant.

And I think that's what most of the tech press doesn't get. They generally look at every new technology as a replacement for something else. To them, introduction of internet radio means that terrestrial radio is dead. Downloaded music means that all physical media is dead. And the new emerging "post-PC" meme -- the rise of smartphones and tablets means that PCs are dead.

The introduction of new technologies and entertainment options will push the pricing/value of the older ones lower. Or just wait. Look at the CD, DVD, and HDTV formats. Once upon a time, those technologies were all unaffordable to all but the most dedicated early adopters. Now, those are all commodified products that sell for dirt cheap.

If anything, continued evolution in consumer electronics expands entertainment options at all price points. And if you're comparing what's available to today's lower income consumers versus a generation ago, I think there's a lot more available.

[Feanor]

I dunno. Life expectancy is higher, even much of the poor have TV, internet, smartphones. Most welfare programs now consider internet service in the basket of necessities in needs calculations. Huge advantage over previous generations just in the access to information/education the internet provides.
...
The other thing is here is that it is ridiculous to imply that availability of gadgets equates with quality of life.

The 22 year old might well have a unlimited data iPhone plan, but what is that when his Wal-Mart job ensures that he afford nothing but hoodies and live in his parents' basement.

[kexodusc]

The other thing is here is that it is ridiculous to imply that availability of gadgets equates with quality of life.

The 22 year old might well have a unlimited data iPhone plan, but what is that when his Wal-Mart job ensures that he afford nothing but hoodies and live in his parents' basement.

I suppose it is a bit better than the coal-mine job that affords you nothing but overalls so you can live in your parents' basement with no availability of gadgets.

Your profiling aside, the availability of the gadgets I mentioned are pretty significant in that ability to work with such technology is probably essential for employment going forward, and the only thing ridiculous here is how fast you brush aside the advantage of being connected to the single greatest source of information our race has produced. Whether they choose to take advantage of it to educate and better themselves, or use it to tell everyone on facebook what they just ate doesn't diminish the potential. Hardly trivial. Pretty sure kids a generation ago didn't all have a library and encyclopedias on the mantle.

Sheesh.

[Feanor]

....
Your profiling aside, the availability of the gadgets I mentioned are pretty significant in that ability to work with such technology is probably essential for employment going forward, and the only thing ridiculous here is how fast you brush aside the advantage of being connected to the single greatest source of information our race has produced. Whether they choose to take advantage of it to educate and better themselves, or use it to tell everyone on facebook what they just ate doesn't diminish the potential. Hardly trivial. Pretty sure kids a generation ago didn't all have a library and encyclopedias on the mantle.

Sheesh.
Fine. Yes, information applicances are a great thing, I won't deny. In a recent Nat Geo issue I saw that the average in the poorest countries for land-line 'phones is 1/100 people; for cell phones it's 22/100 -- that's almost decent and it's got to be very liberating for those people.

However Facebook goes only so far when you work at Wal-Mart or McDonalds.

[Sir Terrence the Terrible]

But I have felt for quite a while that media orignators have a distorted view of what people should, and are actually willing, to pay for their crap. E.g. we've had long debates with Sir Terrence on the subject of whether $0.99/song download justfied can be justfied vs. a $10 phyisical CD. An industry insider, Sir T. lives in a la-la land where this makes sense but most of us have a more rational perspective.



Feanor, I think a lot of people have a distorted view of how much it costs to produce things, and they should not be deciding on how much it cost to sell it for that reason.

The music companies do not set the price that Apple charges on Itunes, Apple decides that. So when making comments about prices the "industry" sets up, it might be better to define which part of the "industry" you are talking about.

The La La land that I live in does not decide the sell price of anything, we actually make the content, and that is all we do. The bean counters and marketing folks decide the prices. This is another area you need to be very specific about.

The film industry is not just one homogeneous entity. While some are looking to explore this stupid idea of a $30 charge for seeing the movie 60 days after released, not all studios are behind this stupid idea. From what I have heard on the street, only Warner, Sony, Fox and Universal are pitching this stupid idea, Disney and Paramount wants no part of it each for their own reason.

[pixelthis]

My cable company already had 9.99 for releases still in theaters(I saw
SKYLINE that way) so 30 bucks for sixty days after? PSHAWWWW!.
This dumb idea is gonna sink faster than the TITANIC.
Too much crack being shipped into HOLLYWOOD.:1:

[Feanor]

Feanor, I think a lot of people have a distorted view of how much it costs to produce things, and they should not be deciding on how much it cost to sell it for that reason.

The music companies do not set the price that Apple charges on Itunes, Apple decides that. So when making comments about prices the "industry" sets up, it might be better to define which part of the "industry" you are talking about.

The La La land that I live in does not decide the sell price of anything, we actually make the content, and that is all we do. The bean counters and marketing folks decide the prices. This is another area you need to be very specific about.

The film industry is not just one homogeneous entity. While some are looking to explore this stupid idea of a $30 charge for seeing the movie 60 days after released, not all studios are behind this stupid idea. From what I have heard on the street, only Warner, Sony, Fox and Universal are pitching this stupid idea, Disney and Paramount wants no part of it each for their own reason.
Terrence, sorry: I made that sound a little more personal than I meant.

The market decides what the selling price of things is be. This is the case even for such quasi-monopolies as copyright musical content, (though the price is higher than it would be if there were real competion). Who can be sure? Maybe $30 for premier non-theater viewing might be a huge seller. Like Wooch implies, it is just an other market stratification ploy. (Market stratification is finding ways to ensure that those willing to pay a higher price actually will pay the higher price rather the cross-market average price.)

Sure, Apple, the retailer, ultimately decides the download price, (say $0.90/song). But as we established in earlier threads, the royalty is by far the largest portion of the to Apple. And the royalty, the cost component is, indeed, set further up the distribution chain than the retailer.

[Sir Terrence the Terrible]

Terrence, sorry: I made that sound a little more personal than I meant.

No worries, you know I have thick skin ;)


The market decides what the selling price of things is be. This is the case even for such quasi-monopolies as copyright musical content, (though the price is higher than it would be if there were real competion). Who can be sure? Maybe $30 for premier non-theater viewing might be a huge seller. Like Wooch implies, it is just an other market stratification ploy. (Market stratification is finding ways to ensure that those willing to pay a higher price actually will pay the higher price rather the cross-market average price.)

Feanor, there is plenty of competition for copyrighting musical content. The Record companies have their own copyright administration, and there are literally hundreds of copyright administrators. Copyright Administration is no monopoly, its not even close to one.


Sure, Apple, the retailer, ultimately decides the download price, (say $0.90/song). But as we established in earlier threads, the royalty is by far the largest portion of the to Apple. And the royalty, the cost component is, indeed, set further up the distribution chain than the retailer.

You are correct, the royalty costs are set further up the chain than retail. From a .90 cents a song price, between 6-8% goes directly to the artist. That is the percentage for downloads, and only the top artists get the 8%. This is then followed by including costs of the sale, digital rights management costs, bandwidth fees, transaction fees, mechanical royalties to songwriters/publishers, marketing costs, etc. This all goes for a single song. If I was selling an album, these costs are spread over the entire album. There are costs between the label and the retail concerns, and costs between the record company and the artist. The market decides what these costs are going to be, and let's face it(and as much as I hate to say it) this is capitalism at work.

[pixelthis]

I was told once that the entire cost of putting a disc together (and thats everything)
was around two bucks. The rest is pure gravy. THIS WAS IN "95", but even if you doubled it thats still just four bucks. Where I worked minimum wage temps were brought in on
an hourly basis to pack discs.
Once they called in a hundred, the discs weren't made for some reason, and they sent everybody home.
RECORD companies have been raking in the bounty for years, and yes, this is the free market, and said market requires some discipline, or it will bite you in the butt.
PEOPLE in the record industry are used to making bookoos of money without trying
that hard, something I CALL THE "Charlie Sheen EFFECT", and now the collective
trip called the record industry is about over. SOMETIMES the free market works slowly,
but it does work.:1:

[Woochifer]

Well, looks like $30 PPV movie has come to Directv. The Adam Sandler/Jennifer Aniston comedy Just Go With It made its debut on Directv's newly christened "Home Premiere" service last week.

http://www.thewrap.com/sites/default/files/Screen%20shot%202011-04-21%20at%207.12.45%20PM.png

That movie is in its 8th week of release in theaters, and is currently showing on fewer than 400 screens. The preliminary box office returns indicate that the movie's debut on Home Premiere had minimal impact on big screen attendance for that movie. The theatre owners are ready to go to war with the studios over this. I don't see the point, given that I doubt Directv got too many takers at that price.

http://www.thewrap.com/movies/article/premium-vod-impact-nil-just-go-it-box-office-performance-26750

Directv subscribers already have several other $5 PPV movie choices, and $30 is just way too much sticker shock for a two-month old movie that will be out on DVD/Blu-ray and $5 PPV within a couple more months.

[pixelthis]

ESPECIALLY since its not that good a movie anyway.
Most wouldn't pay that for AVATAR. And theater owners can raise a barn if they want to,
their industry is done for long term.:1:

[Sir Terrence the Terrible]

There is a email circulating around Hollywood right now from 26 very influential Directors coming out against this shortened window release format. Personally, I think the studios will blink on this one, as I feel this letter will be the first of many from different camps within Hollywood.

[bobsticks]

There is a email circulating around Hollywood right now from 26 very influential Directors coming out against this shortened window release format. Personally, I think the studios will blink on this one, as I feel this letter will be the first of many from different camps within Hollywood.

Whattup T.,

What do the directors cite as their reasoning for taking this position? Just curious.

[Sir Terrence the Terrible]

Whattup T.,

What do the directors cite as their reasoning for taking this position? Just curious.

Quite a few of them are producers as well as Directors. They fear that the shortened window will hurt their production companies bottom line based on how exhibition and home video release contracts are currently constructed. If a movie is doing well in the theater, the shortened window will dig into both the theater owners, and the producer and distributer revenue. They also fear piracy will be a problem, and Disney agrees with this - hence their lack of support.

[Woochifer]

There is a email circulating around Hollywood right now from 26 very influential Directors coming out against this shortened window release format. Personally, I think the studios will blink on this one, as I feel this letter will be the first of many from different camps within Hollywood.

Regardless of the politics, I think this idea will die out simply because I don't see a big market for $30 PPV, no matter what the release window is. It's almost like someone wanted to purposely float this idea as a trial balloon for the expressed purpose of killing it. The whole ruckus in the entertainment media about it is just a tempest in a teapot. Myopia's running rampant with the studios who see it as a cash cow, and theater owners who see it as the apocalypse. I think consumers will clearly see it for the supreme ripoff that it is.


Quite a few of them are producers as well as Directors. They fear that the shortened window will hurt their production companies bottom line based on how exhibition and home video release contracts are currently constructed. If a movie is doing well in the theater, the shortened window will dig into both the theater owners, and the producer and distributer revenue. They also fear piracy will be a problem, and Disney agrees with this - hence their lack of support.

And some theater owners have already responded by dropping these "Home Premiere" titles from all of their screens when they come out on PPV, even though that particular movie might still be doing well at the box office. I doubt that the PPV revenues will even come close to the box office take. That will be the deciding factor.